It is human tendency to opt and look for progressive options – a bigger house, a better car, a lucrative investment, etc. Life will come to a standstill if you do not look at the better things that you could have.

Such is the case with home loan transfer too. In this article, we will discuss what a home loan transfer is, and when should you consider doing one.

Home loan transfer, and how is it done?

Home loan transfer taking over your outstanding amount to a new lender. Generally, home loan transfer is done when you are offered a better rate of interest by another lender. However, before transferring, you need to settle your home loan dues with your existing lender, as on date. The remaining amount, then, can be taken to a different financial lender who is offering you a better interest rate.

To complete the transfer, you may have to complete specific documentation and other formalities. This will help your new lender to pay off the loan to your old lender and takeover the outstanding loan amount. Once the transfer is done, you can start paying EMIs to you the new lender.

When should you consider a home loan transfer?

There are various situations in which home loan transfer is the best thing to do. However, below we’ve listed down three critical situations when home loan transfer can be lucrative.

To switch from Fixed Rate to Floating Rate of interest:

Sometimes, a floating rate of interest can be more lucrative than a fixed rate. In such situations, you can tell your existing lender that you want to switch from a fixed rate to floating rate. If your current lender does not permit this switch, then you can consider a home loan transfer by switching over to another lender. This can help you save on your internal cost.

To reduce the EMI amount:

Financial situations are dicey; if there is any sudden need for more money, and you want to lower your monthly commitments, then you can extend your tenure period. If your current lender doesn’t offer you that, you can consider a home loan transfer to a new lender. Also, the new lender should provide you with a lower rate.

To borrow more:

After taking a loan, you will still have to consider the daily and monthly expense. In this case, home loan transfer can help you avail for more funds by opting for a bigger loan.

Similarly, you can also opt for home loan transfer when you want to reduce the tenure period. In case you wish to avail more favourable terms or better service on your home loan, you can opt for a home loan transfer.

Note: Home loan transfer should be done only when your current lender is unable to offer you better service. Avoid too many transfers, as it can give you a bad credit score.

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